Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis

This paper contributes to the debate about the impact of population ageing on health-care (HC) expenditure. Some health economists claim that the commonly presumed impact of population ageing is a 'red herring'. Based on empirical studies, these authors conclude that proximity to death and not age per se matters. In projecting HC expenditure for Switzerland, the present study provides evidence that proximity to death is of marginal importance. These projections suggest that population ageing is still the most important age-related cost-driver. Moreover, morbidity outweighs mortality as a factor of HC expenditure. But most vital are non-demographic drivers such as medical progress. Thus, from the point of view of cost-benefit analysis one should even ignore costs of dying when projecting HC expenditure. Moreover, regressions might overestimate proximity to death due to systematic biases. Finally, ever-increasing HC expenditure can be slowed down by appropriate policy measures.